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Johnson City tests legal footing in possible disagreement with late contractor

David Floyd • Sep 14, 2019 at 10:00 PM

A wastewater project more than a year overdue could mean thousands of dollars in extra expenses for Johnson City.

During a meeting on Sept. 5, city commissioners agreed to hire outside counsel to evaluate the city’s legal footing in the event Frizzell Construction Company, a contractor based in Bristol, and the city disagree over the extra incurred cost of the project. Commissioners passed the item with their consent agenda.

“We anticipate that we’re going to get to the point where we’re going to have a disagreement over who should pick up that cost,” said City Manager Pete Peterson on Sept. 5, “so we just want to bring this litigator in to review the facts at this point to see if what we’re thinking is a valid thought process.”

Tom Witherspoon, the director of city water and sewer services, said Frizzell Construction Company provided the city with a low bid in fall 2015 to renovate two of the three city-owned-and-operated wastewater treatment facilities: the Knob Creek and the Brush Creek treatment plants. The total bid was $11.9 million.

The city hired the contractor, Witherspoon said, to build a new pumping station at the Knob Creek plant and two buildings at the Brush Creek facility, one with sludge processing and another with a new disinfection process that uses bleach.

The work at both Knob Creek and Brush Creek also involved converting unused basins to handle peak wet weather flows, and Witherspoon said there was also associated site work at each plant to allow for access to the new structures.

Peterson said on Sept. 5 that the project is more than a year overdue.

Witherspoon said the project was initially scheduled for completion in March 2018.

“Some changes have occurred with each project allowing eligible time to be added to each as recommended by the engineer,” Witherspoon said. That additional eligible time, the city said Friday, is still under review by the engineer, CDM Smith.

Peterson said the additional cost to the city comes from the extra money paid to CDM Smith, an engineering and construction company headquartered in Boston, to serve as the city’s representative on the project and conduct inspections of the work to ensure it’s being built according to plan.

“We had built into our budget and our cost projections paying that inspector through the agreed upon inspection date,” Peterson said. “We didn’t have anything in our budget for that date forward, so we’ve incurred some pretty significant cost there.”

Although Witherspoon said the value of the extra cost to the city has not been determined at this time, Peterson said the extra cost is probably in the six-digit range.

Ben Frizzell, president of Frizzell Construction Company, said on Thursday that delays on the project resulted from events and circumstances outside the company’s control.

“Facts concerning these delays will be presented to the city of Johnson City at a later date,” he said.

The city has indicated it will hire Nashville’s Bass, Berry & Sims to review the circumstances of the project.

“The firm has a specialized department for real estate and construction issues, including a specialized area addressing construction contracts and dispute resolution,” staff wrote in a summary of the item included in commissioners’ agenda packet on Sept. 5. “This is an area of the law that requires a certain level of specialization, as such, outside counsel is necessary.”

The firm will review the documents associated with the project, Peterson said, to evaluate whether the city has a defensible legal position.

“We are not at the point that we’re getting ready to go to court over this contract,” Peterson said on Sept. 5, “but we have some concerns that there may be a disagreement about the final payment in closing out this contract.”

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